Investing in real estate is a good way to build wealth. Working in your favor is different options for acquiring properties.One such option is not broadly known, yet it raises a lot of curiosity. Known as hard money lending, this type of financing comes from private individuals or small groups.
Based on the type of property you are buying, commercial hard money lenders California will finance your purchase without considering your credit score. Typically, interest is higher than a standard mortgage, which is why it is better for short-term lending needs.
Who Benefits from Hard Money Loans?Mostly developers and people who buy houses to resell for a profit will use hard money loans to fund deals. In many cases, lenders finance 100% of the purchase price for different properties. While your credit score is not a criteria for approval, some lenders will require you to use real assets as collateral for the loans.
If you are confident that you can turn a huge profit from buying a piece of property, this financing instrument might work best for your lending needs. Some investors choose to borrow hard money to buy the property, fix it up and resell it at a higher price.
After this, they will get a new loan based on the new property value that has increased. Money from the new loan is used to pay off the hard money loan.
Cut Through Red TapeAnother good thing about this type of loan is you can skip the arduous process of going through a traditional lender. Still, you should build a relationship with a local lender who specializes in this type of loan. Usually, funds are available within a couple of days and does not include appraisal costs.
Keep in mind that there are different requirements and protocol for different lenders. Generally, your credit worthiness is not part of the evaluation process to determine whether your request has the potential for a loan approval.
A Great Way to Finance Short-Term InvestmentsIf you are in the renovation or development business, this type of lending is good for your commercial real estate purchases. You may also be able to negotiate more favorable repayment terms since you are borrowing from private lenders.
This strong tool will put properties in your hand that you can fix and resell for a generous profit. When you are trying to build your wealth portfolio, this is one more way to diversify your assets.